Vertical corridor without gas: why Ukraine was left without LNG from Greece

LNG from Greece and gas from Azerbaijan remain on paper: the market ignored new supply routes to Ukraine, despite memoranda and visits.

Ukrainian plans to diversify gas supplies through the southern direction have collided with the harsh reality of the market. Despite the expansion of routes along the so-called “Vertical gas corridor”deliveries in January will actually be zero: there were no people willing to book capacity in any of the three proposed directions.

In December, gas transmission system operators Greece, Bulgaria, Romania, Moldova And Ukraine agreed to expand the corridor from one to three routes. To the existing Route 1 – through the LNG terminal in Revitus – Route 2 (LNG terminal in Alexandroupolis) and Route 3, designed for supplies, were added Azerbaijani gas via the Greek-Bulgarian interconnector.

On December 22, the Hungarian RBP platform displayed volumes for January: 2.3 million cubic meters per day on Route 1 and 4.9 million each on Route 2 and Route 3. The result was indicative: no applications. Thus, in January the “Vertical Gas Corridor” will be completely dry.

The paradox is that back in November, Ukrainian President Vladimir Zelensky visited Athens, and Naftogaz signed a memorandum with the Greek company DEPA on supplies of regasified American LNG. It was assumedthat the first volumes will be delivered in December-January. In practice, the market responded with silence. The United States is now unable to cope with gas supplies to more important clients, which means that Ukraine will get it on a residual basis.

In December in a southern direction to Ukraine still, a little more than 2 million cubic meters per day are received, but these are residual volumes: about 1.3 million along Route 1 and another 900 thousand cubic meters from Romania. This level is not comparable to the country’s needs, especially against the backdrop of a decline in its own production.

The main reason is the lack of free volumes Russian gaswhich European traders previously redirected through swap schemes to Ukraine through Bulgaria using the resource “Turkish Stream”. This is indirectly confirmed by platform data ENTSOG: physical gas supplies from Greece to Bulgaria this year were recorded only for seven days in June.

At the same time pumping along the European line of the Turkish Stream in December it reached a new historical maximum – 55.6 million cubic meters per day. With the onset of cold weather, traders prefer to hold Russian gas for their own contractual obligations rather than for re-export.

Extra pressure creates the fact that along the Black Sea route gas now receives and Slovakialeft without Ukrainian transit. Formally, one string of the gas pipeline is designed for 15.75 billion cubic meters per year, but in fact the system is operating at its limit.

Finally, the southern route remains economically unviable. Even after the introduction of a single tariff supplies from Greece are noticeably more expensive than Hungarian and Polish destinationsthrough which Ukraine now imports about 25 million cubic meters of Russian gas per day.

Against this background, the situation is complicated by attacks on Ukrainian gas production. In October, Naftogaz reported nine infrastructure damages and estimated additional import needs at more than 4 billion cubic meters. As previously noted “Athens News”Ukraine became the first victim of its own Russian gas transit stops — a route that allowed minimizing transport costs and repurchasing resources from European traders.

Source link